1. PUBLIC HEARING: Development (Impact) Fees - Land Use Assumptions & Infrastructure Improvement Plan Reports June 30, 2014

2. SB 1525, initiated by Central Arizona Homebuilders, was signed into law April 26, 2011 by Governor Brewer requiring Arizona cities and towns to update their impact fee programs. Background

3. Impact fees are a funding mechanism to help cover the cost of facilities and infrastructure needed to serve new development City of Tucson established impact fees for streets and parks in 2004; for police, fire and public facilities in 2007 A total of $57.8 million has been collected in impact fee revenue to date In January 2012, the public facilities fee was eliminated and police and fire fees were reduced due to SB 1525 The City began the process of re-doing it’s fee program to meet SB 1525 requirements in September 2013

4. Timeline for Adoption of New Fees May 1 Required studies (LUA & IIPs) were posted (wait 60 days until public hearing) June 30 Public Hearing on LUA & IIPs (wait 30-60 days prior to adoption) Aug 5 Mayor and Council adopt LUA & IIPs Aug 10 Post Notice of Intent to Assess Fees and Draft Ordinance (wait 30 days until public hearing) Sept 9 Public Hearing on Proposed Fees and Ordinance (wait 30-60 days until adoption) Oct 9 Adopt Fees and Ordinance (wait 75 days until fees are effective) Dec 23 Fee effective date

5. Stakeholder Discussions Meetings held with representatives of Southern Arizona Homebuilders Assoc, Metropolitan Pima Alliance and AZ Multihousing Association Examples of concerns include: –Potential fee increases during economically challenging times –Methodology to establish existing levels of service –Questions/concerns about specific projects being proposed –Need for transparency in how funds are being expended Additional meetings can be held over next 3 weeks to further discuss potential changes

6. Land Use Assumptions Report Provides growth, land use and employment projections within each of the 5 benefit districts over a 10 year period -73,000 new residents -31,000 new housing units -48,000 new jobs

7. Infrastructure Improvement Plans (IIP) State requirements: Establish current levels of service Calculate cost per new unit of development (this establishes upper limit for what the City can charge for the impact fees) Project revenues based on projected growth (LUA report) Develop 10-year project list (“necessary public facilities needed to serve new development”)

8. IIP for Streets Demand for New Arterial Capacity –Number of new trips x trip length = new capacity needed –Trip generation rates based on Institute of Transportation Engineer’s Trip Generation Data –Trip length based on US Census and PAG data and evaluated for land use categories Cost of New Capacity –Based on recent construction projects for road widening and new construction Estimate Revenue by Benefit District –Based on development forecasts from PAG data and Plan Tucson Develop 10-Year Project Plan –Based on new capacity projects in CIP –Includes RTA projects requiring local funding (a premise of RTA plan) –Includes non-widening capacity such as bus pullouts and sidewalks in developed area

9. IIP for Parks Net facilities value for existing parks facilities, land, and improvements based on current replacement costs Current level of service by dividing net facility value by existing City population to establish a per capita unit value, which is then converted to a per dwelling unit value Fees only charged to residential because of limited nexus between parks and non-residential 10-year project plan - facilities needed to serve new development; total project cost must roughly match projected revenues

10. 5 Benefit Districts for Streets and Parks Fees Helps ensure funds are spent in reasonable proximity to development

11. IIPs for Police & Fire Net facilities value for existing police and fire facilities, land, vehicles and equipment based on current replacement costs Current level of service - divide net facility value by existing population to establish per capita value with is then converted to value per dwelling unit City-wide benefit district for collection and expenditure of fees (integrated service delivery systems) Impact fees charged to residential and non-residential development (split determined based on call generation data) 10-year project plan - facilities needed to serve new development; total project cost must roughly match projected revenues

12. Recommended Modifications to IIPs Include Certificates of Participation (COPs) in calculating net asset valuation (applies to parks, police and fire) Include full value of new Fire Central facility in fire asset valuation Change existing non-residential square footage from 217 million to 149 million based upon further consultation with Assessor’s office Police – remove replacement vehicles

13. Updated Development (Impact) Fee Table Historic, Current, Proposed, Revised Proposed FACILITY RESIDENTIAL USES (per unit) NON-RESIDENTIAL USES, (per 1000 square feet) Single- Family Residence Condo/ Townhome Multi-Family Residence/ Apartment RetailOfficeIndustrial Streets $6,017 $4,838 $4,215 $3,978 $3,610 $2,580 $6,647 $4,282 $3,988 $5,087 $997 $2,196 Parks $3,039 $3,078 $1,935 $2,066 $2,093 $1,591 $1,854 $1,878 $1,032 $0 Police $597 $750 $543 $643 $405 $509 $543 $643 $362 $455 $402 $476 $505 $437 $563 $699 $505 $437 $563 $699 $505 $437 $563 $699 Fire $366 $483 $357 $469 $248 $327 $357 $469 $222 $293 $263 $346 $172 $156 $196 $269 $172 $156 $196 $269 $172 $156 $196 $269 TOTAL $10,019 $10,328 $7,363 $7,885 $6,934 $7,144 $6,469 $6,681 $6,048 $6,236 $4,277 $4,434 $7,324 $7,240 $5,041 $5,250 $4,665 $4,581 $5,846 $6,055 $1,674 $1,590 $2,955 $3,164

14. How do we compare? Single Family Residential Fees TUCSONMARANAORO VALLEY PIMA COUNTY STREETS$6,017$5,599$1,990$5,478 PARKS$3,039$2,461$856$1500 POLICE $597$0$310$0 FIRE $366$0 CST$0$3,250$3,900N/A TOTAL$10,019$11,310$7,056$6,978

15. 10-Year Projected Revenue STREETS$ 269.1 M PARKS$80.2 M POLICE$ 36.1 M FIRE$ 16.1 M TOTAL$ 401.5 M

16. Proposed projects in draft IIPs were selected from current Impact Fee Project Plans, the CIP, and unmet needs list City must update LUAs and IIPs at least every five years; can do so more frequently Mayor and Council can adopt changes to the IIP at any time without a public hearing if it does not cause a fee increase of more than 5% IIP will continue to be incorporated into City CIP Process to Update IIPs

17. Staff Recommendation Incorporate the following needed modifications into the Final IIPs: –Include Certificates of Participation (COPs) in calculating net asset valuation (applies to parks, police and fire) –Include full value of new Fire Central facility in fire asset valuation –Change existing non-residential square footage from 217 million to 149 million based upon further consultation with Assessor’s office –Police, remove replacement vehicles Over the next 3 weeks, consider additional modifications through review and consultation with stakeholders and Mayor and Council offices to develop final LUA & IIPs for adoption August 5th